Smart Grid Provisions in H.R. 6, 110th Congress

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Smart Grid Provisions in H.R. 6, 110 Congress
Updated February 13, 2008
Amy Abel
Specialist in Energy Policy
Resources, Science, and Industry Division

Smart Grid Provisions in H.R. 6, 110 Congress
Summary
The term Smart Grid refers to a distribution system that allows for flow of
information from a customer’s meter in two directions: both inside the house to
thermostats and appliances and other devices, and back to the utility. This could
allow appliances to be turned off during periods of high electrical demand and cost,
and give customers real-time information on constantly changing electric rates.
Efforts are being made in both industry and government to modernize electric
distribution to improve communications between utilities and the ultimate consumer.
The goal is to use advanced, information-based technologies to increase power grid
efficiency, reliability, and flexibility, and reduce the rate at which additional electric
utility infrastructure needs to be built.
Both regulatory and technological barriers have limited the implementation of
Smart Grid technology. At issue is whether a distinction for cost allocation purposes
can be made between the impact of Smart Grid technology on the wholesale
transmission system and its impact on the retail distribution system. Another issue
limiting the deployment of this technology is the lack of consistent standards and
protocols. There currently are no standards for these technologies. This limits the
interoperability of Smart Grid technologies and limits future choices for companies
that choose to install any particular type of technology.
H.R. 6, as signed by the President, contains provisions to encourage research,
development, and deployment of Smart Grid technologies. Provisions include
requiring the National Institute of Standards and Technology to be the lead agency
to develop standards and protocols; creating a research, development, and
demonstration program for Smart Grid technologies at the Department of Energy;
and providing federal matching funds for portions of qualified Smart Grid
investments.

Contents
Introduction and Overview..........................................1
Selected Utility Applications.........................................4
Southern California Edison Company..............................4
Pacific Northwest GridWise™ Demonstration.......................5
TXU Electric Delivery Company..................................6
Summary of H.R. 6 Smart Grid Provisions..............................7
Section 1301. Statement of Policy on Modernization of
Electricity Grid............................................7
Section 1302. Smart Grid System Report...........................7
Section 1303. Smart Grid Advisory Committee and
Smart Grid Task Force......................................7
Section 1304. Smart Grid Technology Research, Development,
and Demonstration.........................................8
Section 1305. Smart Grid Interoperability Framework.................8
Section 1306. Federal Matching Funds for Smart Grid Investment Costs..8
Section 1307. State Consideration of Smart Grid.....................8
Section 1308. Study of the Effect of Private Wire Laws on
the Development of Combined Heat and
Power Facilities...........................................8
Section 1309. DOE Study of Security Attributes of
Smart Grid Systems........................................9
List of Figures
Figure 1. Electric Transmission Network...............................1
Figure 2. The Electric Power System..................................2

Smart Grid Provisions in H.R. 6,
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110 Congress
Introduction and Overview
The U.S. electric power system has historically operated at such a high level of
reliability that any major outage, either caused by sabotage, weather, or operational
errors, makes news headlines. As the August 14, 2003, Midwest and Northeast
blackout demonstrated, a loss of electric power is very expensive and can entail
considerable disruption to business, travel, government services, and daily life.
The electric utility industry operates as an integrated system of generation,
transmission, and distribution facilities to deliver power to consumers. The electric
power system in the United States consists of over 9,200 electric generating units
with more than 950,000 megawatts of generating capacity connected to more than
300,000 miles of transmission lines; more than 210,000 miles of the transmission
lines are rated at 230 kilovolts (kV) or higher (Figure 1).¹ In addition, approximately
150 control centers manage the flow of electricity through the system under normal
operating conditions.

Figure 1. Electric Transmission Network
¹ North American Reliability Council. NERC 2007 Electricity Supply and Demand
Database.

Most electricity in the United States is generated at power plants that use fossil
fuels (oil, gas, coal), nuclear fission, or renewable energy (hydropower, geothermal,
solar, wind, biomass). At the power plant, energy is converted into a set of three
alternating electric currents, called three-phase power.² After power is generated,
the first step in delivering electricity to the consumer is to transform the power from
medium voltage (15-50 kilovolt (kV)) to high voltage (138-765 kV) alternating
current (Figure 2).³ This initial step-up of voltage occurs in a transformer located at
transmission substations at the generating facilities. High voltages allow power to
be moved long distances with the greatest efficiency, i.e. transmission line losses are
minimized.⁴ The three phases of power are carried over three wires that are⁵
connected to large transmission towers. Close to the ultimate consumer, the power
is stepped-down at another substation to lower voltages, typically less than 10 kV.
At this point, the power is considered to have left the transmission system and
entered the distribution system.
Figure 2. The Electric Power System

The transmission system continues to become more congested, and siting of
transmission lines continues to be difficult. To try to maximize operation of existing
infrastructure, efforts are being made in both industry and government to modernize
electric distribution equipment to improve communications between utilities and the
ultimate consumer. The goal is to use advanced, information-based technologies to
increase power grid efficiency, reliability, and flexibility, and reduce the rate at which
additional electric utility infrastructure needs to be built.
Some utilities have been using smart metering: meters that can be read remotely,
primarily for billing purposes. However, these meters do not provide communication
² The three currents are sinusoidal functions of time but with the same frequency (60 Hertz).
In a three phase system, the phases are spaced equally, offset 120 degrees from each other.
With three-phase power, one of the three phases is always nearing a peak.
³ 1kV=1,000 volts
⁴ The loss of power on the transmission system is proportional to the square of the current
(flow of electricity) while the current is inversely proportional to the voltage.
⁵ Transmission towers also support a fourth wire running above the other three lines. This
line is intended to attract lighting, so that the flow of electricity is not disturbed.

back to the utility with information on voltage, current levels, and specific usage.
Similarly, these meters have very limited ability to allow the consumer the ability to
either automatically or selectively change their usage patterns based on information
provided by the utility.
The term Smart Grid refers to a distribution system that allows for flow of
information from a customer’s meter in two directions: both inside the house to
thermostats and appliances and other devices, and back to the utility. It is expected
that grid reliability will increase as additional information from the distribution
system is available to utility operators. This will allow for better planning and
operations during peak demand. For example, new technologies such as a
Programmable Communicating Thermostat (PCT) could connect with a customer’s
meter through a Home Area Network allowing the utility to change the settings on
the thermostat based on load or other factors. PCTs are not commercially available,
but are expected to be available within a year.⁶ It is estimated that a 4% peak load
reduction could be achieved using Smart Grid technologies.
Both regulatory and technological barriers have limited the implementation of
Smart Grid technology. The Federal Energy Regulatory Commission (FERC)
regulates the wholesale transmission system and the states regulate the distribution
system. In general, the federal government has not interfered with state regulation
of the electric distribution system. However, the Energy Policy Act of 2005
(EPACT05) required states to consider deploying smart meters for residential and
small commercial customers.⁷ At issue is whether a distinction for cost allocation
purposes can be made between Smart Grid technologies’ impact on the wholesale
transmission system and retail distribution system. If FERC and the states cannot
determine which costs should be considered transmission related (federally regulated)
and which should be considered distribution related (state regulated) utilities may be
reluctant to make large investments in Smart Grid technologies.
Another issue limiting the deployment of this technology is the lack of
consistent standards and protocols. There currently are no standards for these
technologies. Most systems are able to communicate only with technologies
developed by the same manufacturer. This limits the interoperability of Smart Grid
technologies and limits future choices for companies that choose to install any
particular type of technology. The Department of Energy’s (DOE’s) Office of
Electricity Delivery and Energy Reliability in partnership with industry is developing
standards for advanced grid design and operations. In addition, DOE is funding
research and development projects in this area.

⁶ Personal Communication. Tom Casey, CEO Current Technologies. August 2, 2007.
⁷ P.L. 109-58, §1252.

Selected Utility Applications
Smart Grid technologies are currently being used by several utilities in small
applications, mainly for testing purposes. However, the technologies within the
customer’s house or business cannot allow for dynamic control of thermostats, for
instance, but rather use switches to either turn an appliance on or off depending on
preset criteria. The following applications of Smart Grid technologies represent
some of the largest installations.
Southern California Edison Company
The California Public Utility Commission as well as the California Energy
Action Plan call for smart meters as part of the overall energy policy for California.⁸
On July 31, 2007, Southern California Edison Company (SCE) filed an application
with the Public Utility Commission of California for approval of advanced metering
infrastructure (AMI) deployment activities and a cost recovery mechanism for the
$1.7 billion in estimated costs.⁹ Beginning in 2009, SCE proposes to install through
its SmartConnect™ program advanced meters in all households and businesses under
200 kW throughout its service territory (approximately 5.3 million meters). It is
expected that demand response at peak times could save SCE as much as 1,000
megawatts of capacity additions. Dynamic rates such as Time of Use and Critical
Peak Pricing should provide incentives to customers to shift some of their electricity
usage to off-peak hours. According to SCE’s application before the California Public
Utility Commission:
Edison SmartConnect™ includes meter and indication functionality that (i)
measures interval electricity usage and voltage; (ii) supports nonproprietary,
open standard communication interfaces with technologies such as
programmable communicating thermostats and device switches; (iii) improves
reliability through remote outage detection at customer premises; (iv) improves
service and reduces costs by remote service activation; (v) is capable of remote
upgrades; (vi) is compatible with broadband over powerline used by third parties;
(vii) supports contract gas and water meter reads; and (viii) incorporates¹⁰
industry-leading security capabilities.
In its filing, SCE is requesting approval to recover the operation and
maintenance and capital expenditures associated with deployment of Edison
S m art C onnect ™.

⁸ California Energy Commission. Energy Action Plan II, September 21, 2005. Available
at [http://www.energy.ca.gov/energy_action_plan/2005-09-21_EAP2_FINAL.PDF].
⁹ Public Utilities Commission of the State of California. Southern California Edison
Company’s (U 338-E) Application for Approval of Advanced Metering Infrastructure
Deployment Activities and Cost Recovery Mechanism. Filed July 31, 2007.
¹⁰ Ibid., p. 7.

SCE is planning to use three telecommunications elements in addition to a smart
meter.¹¹ The telecommunications system will include a Home Area Network (HAN)
that is a non-proprietary open standard two-way narrowband radio frequency mesh
network interface from the meter to customer-owned smart appliances, displays, and
thermostats. Second, there will be a Local Area Network (LAN) consisting of a
proprietary two-way narrowband radio frequency network that will connect the meter
to the electricity aggregator.¹² Finally, a Wide Area Network (WAN) will be
installed using a non-proprietary open standard two-way broadband network that will
be used to communicate between the aggregator and the utility back office systems.¹³
The meter will integrate the LAN and HAN in order to provide electric usage
measurements, service voltage measurements, and interval measurements for billing
purposes. These meters will have net-metering capability to support measurement
of solar and other distributed generation at the customer’s location. In addition, the
meters will have security that has sophisticated cryptographic capabilities.
For the consumer, benefits include load reduction and energy conservation,
which could result in lower electric bills. Outage information will automatically be
sent to the utilities so customers won’t need to report these disturbances. SCE is
expecting to achieve greater reliability over time as additional information from the
system is available to manage operations. For the utility, manual meter reading will
be eliminated as will field service to turn power on to new customers.
Pacific Northwest GridWise™ Demonstration
The Pacific Northwest National Laboratory (PNNL) is teaming with utilities in
the states of Washington and Oregon to test new energy technologies designed to
improve efficiency and reliability while at the same time increasing consumer choice
and control.¹⁴ The utilities involved in the demonstration projects include the
Bonneville Power Administration, PacifiCorp, Portland General Electric, Mason
County PUD #3, Clallam County PUD, and the City of Port Angeles, Washington.
PNNL has received in-kind contributions from industrial collaborators, including
Sears Kenmore dryers, and communications and market integration software from
IBM.
Two demonstration projects involve 300 homes as well as some municipal and
commercial customers. The first project on the Olympic Peninsula involves 200
homes that are receiving real-time price signals over the Internet and have demand-
response thermostats and hot water heaters that can be programmed to respond
automatically. The goal is to relieve congestion on the transmission and distribution
grid during peak periods. These 200 homes will test a “home information gateway”
that will allow smart appliances such as communicating thermostats, smart water

¹¹ Email communication. Paul De Martini. Director Edison SmartConnect™. August 2,

2007.

¹² An electric aggregator purchases power at wholesale for resale to retail customers.
¹³ The two-way broadband network could include cellular, WiMax, or broadband over
powerline.
¹⁴ [http://gridwise.pnl.gov/]

heaters, and smart clothes dryers to respond to transmission congestion due to peak
demand or when prices are high. In addition, consumers will be able to see the actual
cost of producing and delivering electricity, and cash incentives will be used to
motivate customers to reduce peak demand. Part of the demonstration will study
how existing backup generators can be used to displace demand for electricity.
The second demonstration involves 50 homes on the Olympic Peninsula in
Washington, 50 homes in Yakima, Washington, and 50 homes in Gresham, Oregon.
Clothes dryers will be installed in 150 homes and water heaters will be installed in
50 homes to test the ability of PNNL-developed appliance controllers to detect
fluctuations in frequency. Fluctuations in frequency can indicate that the grid is
under stress, and the appliance controllers can quickly respond to that stress by
reducing demand. The appliance controllers will automatically turn off some
appliances for a few seconds or minutes, allowing grid operators to rebalance the
system.
TXU Electric Delivery Company
In October 2006, TXU Electric Delivery entered into an agreement to purchase
400,000 advanced meters. TXU Electric Delivery plans to have 3 million automated
meters installed primarily in the Dallas-Fort Worth area by 2011. As of December
31, 2006, TXU had installed 285,000 advanced meters, 10,000 of which had
broadband over powerline (BPL) capabilities.¹⁵ This system combines advanced
meters manufactured by Landis+Gyr with BPL-enabled communications technology
provided by CURRENT Technologies. TXU Electric Delivery in the near-term will
primarily use the advanced meters for increased network reliability and power quality
and to prevent, detect, and restore customer outages more effectively. It is expected
that TXU electric delivery will eventually include time-of-use options and new
billing methods to its consumers.
On May 10, 2007, the Public Utility Commission of Texas issued an order
allowing for the cost recovery of advanced meters.¹⁶

¹⁵ TXU Electric Delivery Company Annual Report. Form 10-K filing to the Securities and
Exchange Commission. March 7, 2007.
¹⁶ Public Utility Commission of Texas. Project Number 31418. Rulemaking Related to
Advanced Metering. May 10, 2007.

Summary of H.R. 6 Smart Grid Provisions
H.R. 6, signed by the President, contains a provision on Smart Grid technologies
to address some of the regulatory and technological barriers to widespread
installation.¹⁷ This section summarizes Title XIII.
Section 1301. Statement of Policy on Modernization of
Electricity Grid
It is the policy of the United States to support the modernization of the electric
transmission and distribution system to maintain reliability and infrastructure
protection. The Smart Grid is defined to include: increasing the use of additional
information controls to improve operation of the electric grid; optimizing grid
operations and resources to reflect the changing dynamics of the physical
infrastructure and economic markets, while ensuring cybersecurity; using and
integrating distributed resources, including renewable resources; developing and
integrating demand response, demand-side resources, and energy-efficiency
resources; deploying smart technologies for metering, communications of grid
operations and status, and distribution automation; integrating “smart” appliances
and other consumer devices; deploying and integrating advanced electricity storage
and peak-shaving technologies; transferring information to consumers in a timely
manner to allow control decisions; developing standards for the communication and
the interoperability of appliances and equipment connected to the electric grid;
identifying and lowering of unreasonable or unnecessary barriers to adoption of smart
grid technologies, practices, and services.
Section 1302. Smart Grid System Report
No later than one year after enactment, and every two years thereafter, the
Secretary of Energy shall issue a report to Congress on the status of the deployment
of smart grid technologies and any regulatory or government barriers to continued
deployment.
Section 1303. Smart Grid Advisory Committee and Smart
Grid Task Force
Within 90 days of enactment, the Secretary of Energy shall establish a Smart
Grid Advisory Committee, whose mission is to advise the Secretary of Energy and
other relevant federal officials on the development of smart grid technologies, the
deployment of such technologies, and the development of widely-accepted technical
and practical standards and protocols to allow interoperability and integration among
Smart Grid capable devices, and the optimal means for using federal incentive
authority to encourage such programs.
In addition, a Smart Grid Task Force shall be established within 90 days of
enactment. This task force will be composed of employees of the Department of

¹⁷ P.L. 110-140, signed by President Bush on December 19, 2007.

Energy, Federal Energy Regulatory Commission, and the National Institute of
Standards and Technology. The mission of the Smart Grid Task Force is to ensure
coordination and integration of activities among the federal agencies.
Section 1304. Smart Grid Technology Research,
Development, and Demonstration
The Secretary of Energy, in consultation with appropriate agencies, electric
utilities, the states, and other stakeholders, is directed to carry out a program, in part,
to develop advanced measurement techniques to monitor peak load reductions and
energy efficiency savings from smart metering, demand response, distributed
generation, and electricity storage systems; to conduct research to advance the use of
wide-area measurement and control networks; to test new reliability technologies; to
investigate the feasibility of a transition to time-of-use and real-time electricity
pricing; to promote the use of underutilized electricity generation capacity in any
substitution of electricity for liquid fuels in the transportation system of the United
States; and to propose interconnection protocols to enable electric utilities to access
electricity stored in hybrid vehicles to help meet peak demand loads. The Secretary
of Energy shall also establish a Smart Grid regional demonstration initiative focusing
on projects using advanced technologies for use in power grid sensing,
communications, analysis, and power flow control.
Section 1305. Smart Grid Interoperability Framework
The Director of the National Institute of Standards and Technology is primarily
responsible for coordinating the development of a framework for protocols and
model standards for information management to gain interoperability of smart grid
devices and systems.
Section 1306. Federal Matching Funds for Smart Grid
Investment Costs
The Secretary of Energy shall establish a program to reimburse 20% of
qualifying Smart Grid investments.
Section 1307. State Consideration of Smart Grid
The Public Utility Regulatory Policies Act of 1978 (16 U.S.C. 2621 (d)) is
amended to require each state to consider requiring electric utilities demonstrate that
prior to investing in non-advanced grid technologies, Smart Grid technology is
determined not to be appropriate. States must also consider regulatory standards that
allow utilities to recover Smart Grid investments through rates.
Section 1308. Study of the Effect of Private Wire Laws on the
Development of Combined Heat and Power Facilities
Within one year of enactment, the Secretary of Energy shall submit a report to
Congress detailing a study of the laws and regulations affecting the siting of privately

owned electric distribution wires on and across public rights-of-way. This study will
assess whether privately owned electric distribution wires would result in duplicative
facilities and whether duplicate facilities are necessary or desirable.
Section 1309. DOE Study of Security Attributes of Smart Grid
Systems
Within 18 months of enactment, the Secretary of Energy shall report to
Congress the results of a study which provides a quantitative assessment and
determination of the existing and potential impacts of the deployment of Smart Grid
systems on the security of the electricity infrastructure and its operating capability.